Data flow has been relatively light in recent trading sessions, but that hasn’t stopped a handful of asset classes from making big moves.
The US dollar and Treasury yields got a little support from another upbeat key jobs indicator, while the energy commodity took cues from inventory data.
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Titles:
- New Zealand’s GDT auction delivered 1.2% gain in dairy prices (previously 0.8%)
- Japan’s consumer confidence index improved in September from 36.7 to 36.9 (expect 37.1)
- New Japanese Prime Minister Shigeru Ishiba He said the economy is not yet ready for further interest rate hikes, after a meeting with Bank of Japan President Ueda
- Spanish unemployment change in September increased by 3.2K (est. 12.1K, previous 21.9K)
- The Eurozone unemployment rate was unchanged at 6.4% in August as expected
- US nonfarm employment changed in September: 143K (126K expected, 103K previous)
- Environmental impact assessment of crude oil reserves Increased by 3.9 million barrels (-1.5 million expected, -4.5 million previous)
- Barkin, the FOMC official, expressed support for a 0.50% rate cut in September given that borrowing costs were out of sync with inflation and unemployment was nearing its sustainable level.
Broad market price movement:
Dollar Index, Gold, S&P 500, Oil, 10-Year US Yields, Bitcoin Overlay Chart by TradingView
Market correlations appear to have broken down in recent trading sessions, as the lack of top-tier events has seen asset classes move to their individual catalysts.
Crude oil started off strong and continued to lean on the worsening geopolitical conflict in the Middle East, which raised global supply concerns, throughout the trading sessions in Asia and London. However, oil bulls hit a dead end when the EIA report revealed a surprise increase of 3.9 million barrels in inventories instead of the estimated 1.5 million barrel reduction, indicating weak demand conditions.
US stocks still look hamstrung by risk-off flows for most of the day, with investors likely concerned about the potential repercussions of geopolitical tensions on the global economy. However, the S&P 500, Nasdaq and Dow Jones were able to post small gains thanks to higher defense and energy stocks.
The BTC/USD price fluctuated back and forth between resistance around $61,600 and support near $60,500, but ended the day in the red due to the strength of the dollar. However, US bond yields erased some of their earlier gains during the New York session shortly after the ADP numbers were printed.
Forex market behavior: US dollar against major currencies:
Overlay of the US dollar against major currencies Chart by TradingView
The dollar pairs had a slow start, before some of the major currencies took off in different directions.
The yen was on shaky ground after Japan’s new Prime Minister met with Bank of Japan Governor Ueda and announced that the economy was not yet ready for further interest rate hikes, sending the USD/JPY pair higher for most of the day and closing up nearly 2%. In green color.
Meanwhile, the Australian and New Zealand dollars made some gains against the greenback during Asian market hours, but eventually joined the rest of the major currencies in consolidating during the London session.
The USD/CHF pair also broke away from the pack and started rising ahead of the ADP jobs report, which then led to some additional gains for the dollar when the numbers were mostly better than expected.
Potential catalysts coming on the economic calendar:
- Chinese banks remain closed for the holiday
- Swiss consumer price index 6:30 AM GMT
- Eurozone Producer Price Index at 9:00 AM GMT
- US Challenger job cuts 11:30 AM GMT
- Initial unemployment claims in the United States 12:30 pm GMT
- US Services Purchasing Managers’ Index (ISM). 2:00 pm GMT
- US Factory Orders at 2:00 PM GMT
- FOMC Member Schmid’s speech at 2:00 PM GMT
- FOMC Member Bostic’s speech at 2:40 PM GMT
Franc traders are likely to prepare for a release September CPI number in SwitzerlandThis may determine whether the Swiss National Bank (SNB) can continue to cut interest rates again at its next meeting or not.
Next, we have two more pieces of the American jobs puzzle coming up Challenger job cuts report and Purchasing Managers’ Index (ISM) for services It can still shape non-farm payrolls expectations and thus dollar trends.
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